The European Commission has allowed CK Hutchison Holdings and VimpelCom to form a joint venture that would create Italy’s largest mobile telephone network.

The approval follows the commission’s rejection four months ago of Hutchison proposed takeover of British mobile network operator O2.

“Today’s decision ensures that the Italian mobile sector remains competitive, so that consumers can continue to enjoy innovative mobile services at fair prices and on high quality networks,” Margrethe Vestager, the European Commissioner for Competition, said in a statement on Thursday. “We can approve the deal because Hutchison and VimpelCom have offered a strong remedy that enables a new mobile network operator, Iliad, to enter the Italian market.”

Hutchison, parent of mobile operator Three Italia, agreed to combine its operation with VimpelCom’s Wind Telecom in a €21.8 billion (HK$188.47 billion) merger in August last year, in what was to be Italy’s largest deal since 2007.

The European Commission opened an investigation on that merger in March amid concerns about reduced competition and higher prices in the Italian mobile market.

Hutchison and Amsterdam-based VimpelCom received the go-ahead on the condition that the two parties divest sufficient assets that will allow Iliad to compete in the same market, according to the commission.

“Iliad is the fourth successful entrant in the French mobile market and has the know-how and expertise to operate, invest and innovate in the Italian market,” the commission said.

Under the so-called “fix-it-first” remedy proposed to the commission, the Hutchison-VimpelCom venture would divest a certain amount of their radio spectrum from different frequency bands, including 900-megahertz, 1800MHz, 2100MHz and 2600MHz.

They will also have an infrastructure-sharing arrangement, allowing Iliad to piggyback on the venture’s several thousand mobile base station sites in Italy until the French operator has built its own mobile network.

That transfer of spectrum blocks and the sharing of mobile base station sites will enable Iliad to become the fourth mobile operator in Italy, where Vodafone and Telecom Italia’s Tim service also operate.

Hutchison, controlled by Hong Kong’s wealthiest tycoon Li Ka-shing, said the completion of its venture with Nasdaq-listed VimpelCom “is subject to obtaining Italian regulatory approvals, and is expected to complete in the fourth quarter of 2016”.

The combined 3 Italia and Wind operation was estimated last year to cover more than 31 million mobile subscribers and 2.8 million fixed-line customers in Italy.

In May, the European Commission rejected Hutchison’s proposed £10.25 billion acquisition of O2 based on strong concerns that Britain’s consumers would have had less choice and pay higher prices.